Q4 2024 Summary
Published Feb 20, 2025, 11:01 PM UTC- Gannett expects to accelerate same-store digital revenue growth to 7% to 10% in 2025, up from 5.8% in 2024, driven by a combination of consistent digital advertising growth throughout the year and Digital Marketing Solutions (DMS) growth in the last two quarters.
- The company is focusing on personalizing the user experience and enhancing local content creation, which is anticipated to accelerate digital subscriber growth by improving conversion from users to paid subscribers.
- Gannett plans to pay down over $100 million in debt in 2025, aiming to reduce first lien net leverage to closer to 2x by year-end. This financial improvement could enable refinancing into a lower-cost capital structure and reduce potential future dilution.
- Expected Decline in Q1 Free Cash Flow and Adjusted EBITDA: The company anticipates a year-over-year decline in free cash flow and adjusted EBITDA for the first quarter of 2025, which may indicate near-term financial challenges. Management stated, "In Q1, free cash flow is expected to decline on a year-over-year basis. However, for the full year, we are expecting growth in excess of 40%." ( )
- Uncertainty in Digital Marketing Solutions (DMS) Growth Contributions: The expected growth in Digital Marketing Solutions revenue is uncertain, as it is projected to contribute significantly only in the latter half of 2025. This uncertainty might impact the company's ability to achieve its digital revenue growth targets. Management mentioned, "The DMS growth would be more of an enhancer towards the last two quarters of the year... it's hard to say exactly which one will be the dominant one." ( )
- Reliance on Asset Sales Could Impact Long-Term Digital Strategy: The company's reliance on asset sales, such as the sale of the Austin American-Statesman—which has a "45-55 mix of digital and print"—for debt reduction could potentially undermine its long-term strategy of building digital scale. Management noted, "Our long-term strategy is dependent upon the scale that we're building on the digital side." ( )
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -7% (from 669.41M USD in Q4 2023 to 621.26M USD in Q4 2024) | Total Revenue declined as reduced advertising and subscription revenues weighed on performance, suggesting that macroeconomic pressures and shifting consumer demand have weakened the revenue base compared to the stronger figures in the prior period. |
Net Income | Turned positive from -22,896K USD in Q4 2023 to 64,319K USD in Q4 2024 | Net Income improved dramatically, reflected in an EPS turnaround from -0.16 USD to 0.45 USD, indicating that cost optimizations, enhanced revenue mix, and operational efficiencies have significantly reversed previous losses. |
Cost of Goods Sold | -10% (from 419,644K USD in Q4 2023 to 375,799K USD in Q4 2024) | COGS dropped by roughly 10%, likely due to improvements in supply chain management and lower input costs, which aligns with the company’s efforts to streamline production compared to the higher expenditures observed in Q4 2023. |
SG&A Expenses | Slight decrease (from 185,908K USD in Q4 2023 to 178,663K USD in Q4 2024) | SG&A expenses moderated modestly as effective cost management and expense rationalization measures helped align administrative spending with lower revenue, contrasting with the relatively higher costs in the prior period. |
Cash Flow | Improved from a net outflow of 9,422K USD in Q4 2023 to a net inflow of 5,569K USD in Q4 2024 | Cash Flow saw a notable improvement driven by better working capital management and reduced operational outlays, which reversed the negative cash trends experienced in Q4 2023. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Digital Revenue Growth | FY 2024 | 6% to 7% | no guidance | no prior guidance |
Free Cash Flow | FY 2024 | Impact of Q4 debt refinancing | no guidance | no prior guidance |
Revenue Growth for 2025 | FY 2024 | full-year 2025 revenue growth over 2024 | no guidance | no prior guidance |
Debt Repayment | FY 2024 | targeting below 1x | no guidance | no prior guidance |
Adjusted EBITDA | FY 2025 | no prior guidance | Expected to grow YoY in 2025 | no prior guidance |
Total Digital Revenues | FY 2025 | no prior guidance | Expected to grow between 7% to 10% | no prior guidance |
Total Revenue | FY 2025 | no prior guidance | Expected to decline in the low single digits | no prior guidance |
Same-Store Revenue Trends | FY 2025 | no prior guidance | Expected sequential improvement starting in Q2 2025 | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | Expected to grow >40% for FY 2025 | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | Expected increase by $10M YoY | no prior guidance |
Asset Sales | FY 2025 | no prior guidance | Expected in the range $60M to $70M | no prior guidance |
Debt Reduction | FY 2025 | no prior guidance | Expected incremental debt paydown of $50M to $60M in H1 2025 | no prior guidance |
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Debt Paydown and Capital Structure
Q: Plans for debt reduction and refinancing?
A: Gannett plans significant debt paydown in 2025, well north of $100 million. This includes $60–$70 million from asset sales and regular amortization. By year-end, first lien net leverage should be close to 2x, positioning them to refinance into a lower-cost capital structure. They aim to address convertible debt similarly to last year, reducing dilution, though it's likely not a 2025 event. -
Asset Sales and Proceeds
Q: Status and impact of asset sales?
A: Gannett expects $60–$70 million from asset sales in 2025, primarily from the sale of Austin and some real estate. All proceeds will be used to pay down debt. The sale of Austin reflects the overall business mix with a 45–55% split between digital and print. Future asset sales will focus on nonstrategic real estate and only occur at compelling multiples. -
Digital Revenue Growth Outlook
Q: Drivers of 7–10% digital growth in 2025?
A: The anticipated 7–10% same-store digital growth will result from both accelerated digital advertising growth and a rebound in DMS (Digital Marketing Services). Digital advertising growth will be consistent throughout the year, while DMS growth is expected to enhance results in the last two quarters of 2025. -
Antitrust Case Against Google
Q: Update on the case against Google?
A: Gannett's antitrust case against Google is proceeding as planned. They feel confident about their position and expect no impact from the timing of the DOJ's ruling. They anticipate a favorable outcome in the DOJ case and are encouraged by the Texas case set for trial in the first half of the year. -
Growth in Digital Subscribers
Q: Strategies to grow digital subscriptions in 2025?
A: Gannett aims to enhance digital subscriber growth by personalizing user experiences based on engagement data. By focusing on local content creation and tailoring offerings to consumer preferences, they expect to improve conversion rates from users to paid subscribers, particularly in local markets. -
Opportunity with Reuters
Q: Potential revenue from Reuters content offering?
A: The partnership with Reuters represents a low to mid-single-digit million-dollar opportunity over the next couple of years. Long-term potential could be greater, depending on product expansion with Reuters and USA TODAY.